Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Notices 38439

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

and federal securities laws noted in the

Certification.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–18965 Filed 7–15–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–26894]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

July 10, 1998.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated under the Act. All

interested persons are referred to the

application(s) and/or declaration(s) for

complete statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendments is/are available for

public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

August 4, 1998, to the Secretary,

Securities and Exchange Commission,

Washington, D.C. 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for hearing should

identify specifically the issues of fact or

law that are disputed. A person who so

requests will be notified by any hearing,

if ordered, and will receive a copy of

any notice or order in the matter. After

August 4, 1998, the application(s) and/

or declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

New Century Energies, Inc., et al. (70–

9199)

New Century Energies, Inc. (‘‘New

Century’’), a registered holding

company, Public Service Company of

Colorado, a wholly owned electric and

gas subsidiary of New Century (‘‘PSC

Colorado’’), and, NC Enterprises, Inc.

(‘‘NC Enterprises’’), a wholly owned

nonutility subsidiary of New Century,

all located at 1225 17th Street, Denver,

Colorado 80202–5533 (‘‘Applicants’’),

have filed an application-declaration

under sections 6(a), 7, 9(a), 10, and 12(f)

of the Act and rules 43 and 54 under the

Act.

Applicants seek authority to: (1)

Acquire 50% of the equity securities of

WYCO Development LLC (‘‘WYCO’’), a

nonutility company formed for the

purpose of facilitating the transactions

described herein, for an amount not to

exceed $26 million; (2) purchase,

through WYCO, the Front Range and

Powder River Lateral Expansion

(‘‘Powder River’’) pipeline projects from

PSC Colorado and Wyoming Interstate

Company, a non-associated company,

respectively; and (3) lease the Front

Range and Powder River pipelines back

to PSC Colorado and Wyoming

Interstate Company.

PSC Colorado provides electric and

retail natural gas distribution service to

the Denver and Front Range

metropolitan areas. PSC Colorado is

subject to regulation by the Colorado

Public Utilities Commission (‘‘Colorado

PUC’’). The Front Range Pipeline

construction, sale and lease is subject to

review and approval by the Colorado

PUC. The Powder River lease is subject

to review and approval by the Federal

Energy Regulatory Commission.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–18966 Filed 7–15–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40189; File No. SR–AMEX–

97–39]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the American Stock

Exchange, Inc. Relating to Minimum

Trading Increments (Rule 127)

July 10, 1998.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on October

22, 1997, the American Stock Exchange,

Inc. (‘‘Amex’’ or ‘‘Exchange’’) filed with

the Securities Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I and

II below, which Items have been

prepared by the self-regulatory

organization. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons and to grant

accelerated approval to the proposed

rule chage.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to amend

Exchange Rule 127 to add Commentary

.03 to permit members to trade on the

Exchange in increments smaller than

1⁄16 in order to match bids and offers

displayed in other markets for the

purpose of preventing Intermarket

Trading System (‘‘ITS’’) trade-throughs.

The text of the proposed rule change is

available at the Office of the Secretary,

the Amex and at the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization included

statements concerning the purpose of

and basis for the proposed rule change

and discussed any comments it received

on the proposed rule change. The text

of these statements may be examined at

the places specified in Item IV below.

The self-regulatory organization has

prepared summaries, set forth in

Sections A, B, and C below, of the most

significant aspect of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Amex Rule 127 currently provides

that the minimum fractional change for

transactions on the Exchange is 1⁄16 for

securities selling above 1⁄4, and 1⁄32 for

securities selling below 1⁄4. In May 1997,

the Exchange extended trading in

sixteenths to all Amex equity securities

selling at $10 or higher, having

previously only traded securities priced

under $10 in sixteenths. The Exchange

took this step based on its belief that

trading in increments of 1⁄16 promotes

investor protection by enhancing price

improvement opportunities on the

Exchange.

Since Amex’s initiative and

subsequent initiatives by other markets

to implement sixteenths trading, certain

third market makers have disseminated

quotations in a limited number of listed

securities in fractions smaller than a

sixteenth. In addition, ITS has been

modified to permit commitments to

trade to be sent through ITS in fractions

as small as 1⁄64. This ITS modification

permits Amex members to send orders
38440 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Notices

3See Amex Rule 236.

4But see Amex Rule 127, Commentary .01, which

provides that Standard & Poor’s Depositary

Receipts and MidCap SPDRs TM may trade on the

Exchange in increments as small as 1⁄64 of one

dollar.

5 15 U.S.C. 78f(b)(5).

6 15 U.S.C. 78f(b).

7 15 U.S.C. 78f(b)(5).

8 In approving this rule change, the Commission

has considered the proposed rules’ impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

9Securities Exchange Act Release No. 38571 (May

5, 1997), 62 FR 25682 (May 9, 1997) (approving an

Amex proposal to reduce the minimum trading

increment to 1⁄16 for certain Amex-listed equity

securities); Securities Exchange Act Release No.

38678 (May 27, 1997), 62 FR 30363 (June 6, 1997)

(approving a Nasdaq rule change to reduce the

minimum quotation increment to 1⁄16 for certain

Nasdaq-listed securities); Securities Exchange Act

Release No. 38897 (Aug. 1, 1997), 62 FR 42847

(Aug. 8, 1997) (approving a NYSE rule change to

reduce the minimum quotation increment to 1⁄16 for

certain NYSE-listed securities) and Securities

Exchange Act Release No. 39159 (Sept. 30, 1997),

62 FR 52365 (Oct. 9, 1997) (approving a CBOE rule

change to reduce the minimum quotation increment

to 1⁄16 for stocks).

10 Id.

11The Commission notes that any change to the

minimum increment for securities traded through

the facilities of the Nasdaq system would be

considered a change in an existing order-entry or

trading system of an SRO. Accordingly, the NASD

would be required to file a proposed rule change

under Section 19(b)(3)(A) of the Act to change its

minimum increment.

12Telephone conversation between Andrew S.

Margolin, Senior Attorney, Nasdaq, Gene Lopez,

Vice President, Trading and Market Services,

Nasdaq and David Sieradzki, Attorney, Commission

on July 8, 1998.

13To change its minimum increment, an

exchange would be required to file a proposed rule

change that would become immediately effective

under Section 19(b)(3)(A) of the Act.

14See Securities Exchange Act Release No. 38897

(Aug. 1, 1997), 62 FR 42847 (Aug. 8, 1997).

15 15 U.S.C. 78f(b)(5) and 78s(b)(2).

via ITS to a market displaying a

quotation in 1⁄32 or 1⁄64.

The Exchange believes it is important

to provide its members with flexibility

to effect transactions on the Exchange at

a smaller increment than 1⁄16 for the

purpose of matching a displayed bid or

offer in another market at such smaller

increment (i.e., 1⁄32 or 1⁄64) for the

purpose of preventing ITS tradethoughs.3 For example, if the best bid on

the Amex is 8 and a bid of 81⁄32 is

displayed through ITS in another

market center, the Amex specialist or

floor broker may execute a market or

marketable limit order at 81⁄32 in order

to match the other market’s bid. Amex

will retain its existing requirement that

limit orders can only be entered

increments no smaller than 1⁄16.4

2. Statutory Basis

The basis under the Act for the

proposed rule change is the requirement

under Section 6(b)(5) 5 that an Exchange

have rules that are designed to promote

just and equitable principles of trade, to

remove impediments to, and perfect the

mechanism of a free and open market

and, in general, to protect investors and

the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b) of the Act.6

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) 7 requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public.8

Recently, there has been a movement

within the industry to reduce the

minimum trading and quotation

increments imposed by the various selfregulatory organizations (‘‘SROs’’). Last

year, the Amex, Nasdaq Stock Market

(‘‘Nasdaq’’), New York Stock Exchange

(‘‘NYSE’’) and Chicago Board Options

Exchange (‘‘CBOE’’) reduced their

minimum increments.9 Currently,

exchange rules provide for trading of

most equity securities in increments as

small as 1⁄16 of a dollar.10 Amex

represents that several third market

makers have begun quoting securities in

increments smaller than those approved

for trading on the primary markets. The

proposed rule change will provide

Amex with the limited flexibility it

needs to address this development and

remain competitive with these markets.

The size of the minimum trading

increment for securities traded through

the facilities of Nasdaq is determined by

the technical limitations of the Nasdaq

system. Currently, Nasdaq systems are

capable of trading securities priced

under $10 in increments as fine as 1⁄32

of one dollar. Securities priced over $10

may be traded in increments as fine as

1⁄16 of one dollar.11 As a result, the

Commission recognizes that Nasdaq

third market makers may trade exchange

listed securities priced at less than $10

in increments finer than sixteenths.

Nasdaq has informed the Commission

that Nasdaq third market makers are

currently posting quotes for listed

securities in increments finer than

sixteenths.12 The proposed amendment

to Exchange Rule 127, will allow Amex

traders to match prices disseminated by

Nasdaq market makers that may better

the Amex quote by an increment finer

than the current 1⁄16 minimum

increment. In addition, the Commission

notes that the proposal will enable the

Exchange to match prices disseminated

by other exchanges in the event that

another exchange were to reduce its

minimum trading increment.13 The

proposal should assist Exchange

members to fulfill their obligation to

obtain the best price for their customers.

Accordingly, the Commission believes

that it is reasonable for the Exchange to

allow trading in increments finer than

sixteenths for the limited purpose of

preventing an ITS trade-through.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. Approval of the

proposal will provide Amex members

with the ability to match a better bid or

offer made available through ITS,

thereby helping to prevent ITS tradethroughs and ensuring the best

execution of Amex customer orders. The

Commission notes that this proposal is

similar to a proposal by the NYSE that

was published for the full notice and

comment period, no comments were

made on that proposal.14 Therefore, the

Commission believes it is consistent

with Section 6(b)(5) and Section 19(b)(2)

of the Act to grant accelerated approval

to the proposed rule change.15

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposal is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549. Copies of the submission, all

subsequent amendments, all written

statements with respect to the proposed

rule change that are filed with the

Commission, and all written

communications relating to the
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Notices 38441

16 15 U.S.C. 78s(b)(2).

17 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See letter from Timothy H. Thompson, Director,

Regulatory Affairs, Legal Department, CBOE, to

Deborah Flynn, Attorney, Division of Market

Regulation, Commission, dated June 19, 1998

(‘‘Amendment No. 1’’). In Amendment No. 1, the

CBOE proposes to amend the proposed rule change

to add cross-references to new paragraph (b)(vi)

where the Rule only refers to paragraph (b)(v)

presently. The proposed change will make clear to

joint account participants, or the nominee of the

member organization, that the requirements of

paragraph (b)(v) need not be met in order to

participate in the joint account, or in the firm’s

Retail Automatic Execution System account, if the

requirements for paragraph (b)(vi) are met.

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. § 552, will be

available for inspection and copying at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–Amex–97–39 and should be

submitted by August 6, 1998.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,16 that the

proposed rule change (SR–Amex–97–

39) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–18962 Filed 7–15–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40186; File No. SR–CBOE–

98–20]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Board Options Exchange,

Inc. and Amendment No. 1 Thereto

Relating to RAES Eligibility

Requirements for OEX and DJX

Options

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 18,

1998, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the CBOE. On

June 24, 1998, the CBOE filed an

amendment to the proposal.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change, as amended, from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to add a new subparagraph to CBOE Rule 24.17, RAES

Eligibility in OEX and DJX, that would

allow a Market-Maker to participate on

the Retail Automatic Execution System

(‘‘RAES’’) in both options on the

Standard & Poor’s 100 Index (‘‘OEX’’)

and options on the Dow Jones Industrial

Average (‘‘DJX’’) during the same

calendar month by meeting the

eligibility requirements for OEX alone,

DJX alone, or eligibility requirements

which consider the percentage of

transactions and contracts a MarketMaker transacted in OEX and DJX

combined. The text of the proposed rule

change is available at the Office of the

Secretary, the CBOE, and at the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CBOE included statements concerning

the purpose of, and basis for, the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. The CBOE has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Currently, CBOE Rule 24.17(b)(v) sets

forth four eligibility requirements that a

Market-Maker must meet before he can

participate in RAES in either OEX or

DJX. One of these requirements is that

the Market-Maker must execute at least

seventy-five percent of his MarketMaker contracts for the preceding

calendar month in the option class in

which the Market-Maker is participating

on RAES. Because of the high

percentage requirement, a Market-Maker

who qualifies to participate in RAES in

either OEX or DJX would not be able to

qualify to participate in RAES in the

other class. In fact, the Exchange

believes the seventy-five percent

requirement is so high that it serves as

a disincentive for a Market-Maker on

one side of the common structure in

which OEX and DJX are traded to move

into the other side of the structure to

trade the other option product for fear

that the Market-Maker will no longer

qualify for RAES in his primary trading

area.

The Exchange believes, however, that

a strength of the Market-Maker system is

the ability of Market-Makers to move

from one trading pit to another to

provide liquidity and capital when

market conditions warrant. Because the

traders in OEX or DJX stand right next

to each other in the same physical

trading structure, they are in the best

position to provide added liquidity and

capital to the products by moving from

one side of the trading structure to the

other. Consequently, the Exchange

determined to add new sub-paragraph

(b)(vi) to Rule 24.17 to allow a MarketMaker to qualify for RAES in both OEX

and DJX during the same calendar

month (1) by meeting the individual

requirements for OEX, (2) by meeting

the individual requirements for DJX, or

(3) by transacting seventy-five percent of

his contracts for the month in both OEX

and/or DJX combined and by transacting

seventy-five percent of his contracts in

OEX and DJX during the month in

person. A Market-Maker can participate

in RAES in both OEX and DJX during

the same calendar month as long as he

meets one of the sets of criteria above

and as long as the two products

continue to be traded at the same

physical trading location. It should be

noted that in the equity posts on the

floor, a Market-Maker may participate in

RAES in all classes traded at that post.

Although OEX and DJX are technically

traded at two separate trading posts, the

Market-Makers for each product are

separated by a movable railing within

the same physical structure. A MarketMaker must be present in the particular

trading crowd where the class is traded

while he is participating in RAES for

that class.

The Exchange proposes to implement

this rule change at the beginning of the

next calendar month after the rule

proposal is approved by the

Commission. Finally, the Exchange is

proposing to delete current

Interpretation .02 because it is no longer

relevant now that December 1, 1997 has

passed.

2. Statutory Basis

By eliminating a disincentive for

Market-Makers, in the physical structure

where OEX and DJX are traded, to move

between trading pits to provide added

liquidity and capital when market

conditions warrant, the Exchange

believes the proposed rule change is